- Perplexity CEO Aravind Srinivas spoke about the lawsuits the company is facing from news publishers.
- During an appearance at the WSJ conference, Srinivas said Perplexity was previously in discussions with Dow Jones.
- Perplexity is reportedly in talks to raise new funds in a deal that would value it at $8 billion.
Simmering tensions between news publishers and search engines built with artificial intelligence came into the public eye Wednesday at a beachside conference stage.
“Let’s talk about the elephant in the room,” Aravind Srinivas, co-founder and CEO of Perplexity, opened his interview at the Wall Street Journal’s Tech Live conference.
Rupert Murdoch’s Dow Jones, publisher of the Journal, and the New York Post filed a lawsuit in New York on Monday, accusing Perplexity of “free riding” on the journalism they produce. Perplexity’s app allows users to get instant answers to questions with sources and quotes from trusted blogs, news media and academic articles.
The two-year-old startup absorbs cash like oxygen, to have increased successive financing rounds just months apart, and that’s it said to be in conversation to raise a fourth round that would value the startup at $8 billion.
The lawsuit alleges that Perplexity scrapes copyrighted work to feed its search engine, diverting potential readers and customers away from their websites.
“Nobody comes to Perplexity to get their news. People go straight to (The) New York Times and The Wall Street Journal,” Srinivas said. He explained the purpose of Perplexity: to help users digest the news. “People come to Perplexity because they want to understand the news in the context of what they already know. ‘How does this news affect me?’”
“We’re not interested in taking the exact content and resurfacing it. We’re not trying to be the news alternative,” he later added. “So we’re going to do our best to communicate what the goals of our product are and how they can be symbiotic with existing news channels.”
The company has said it does not collect data for training large language models; rather, it searches the Internet and creates an index of web pages that the models can link to.
The entrepreneur remained calm when WSJ reporter Deepa Seetharaman asked questions about Perplexity’s cash flow and news outlets’ claims that the quotes are not clear. Srinivas acknowledged that the technology is “not perfect.”
“We are still working with a piece of technology that is constantly improving,” he responded to a question about plagiarism. “Yesterday, Anthropic released another version of their models, Claude 3.5. It’s getting better and better every few months. So whatever problems exist today are new problems that didn’t exist a year or two ago.”
In his interview, Srinivas defended the company’s modus operandi, saying it had had a conversation with the Journal’s publisher in June about potentially entering into a contract that would allow Perplexity to share future advertising revenue with the publisher. He did not specify the contents of the contract but said the conversation turned dark.
“We were definitely very surprised about the lawsuit because we actually wanted to have a conversation,” Srinivas said.
This month, the company will start selling ads for popular searches, Srinivas said. For example, a user can ask Perplexity about a shoe company that just went public on Wall Street. The search engine returns a summary of the shoemaker’s stock market debut with sources and quotes. If a shoe brand pays to advertise in the results, Perplexity shares some of the money it makes with publishers whose content it used to answer the question.
“We can only survive if we also make money ourselves, and not just keep raising funds,” Srinivas said. “If we then start making money ourselves, it will certainly benefit all publishers and ensure that they continue to prosper.”
Just last week, The New York Times sent Perplexity a cease-and-desist letter to end the practice of using their stories to train chatbots. The news channel is also suing OpenAI and Microsoft for copyright infringement.
According to Srinivas, Perplexity hopes to become profitable within three to five years through subscription and advertising sales. He acknowledged that while Perplexity doesn’t train large language models and doesn’t need to raise as much capital as an OpenAI or Anthropic, the influx of investor money means it can move faster.
“Fundraising obviously helps us stay focused on the product and keep improving the product, but not worry too much about the financials,” Srinivas said.
